Allentown Mayor Ed Pawlowski responded in an email that he read the "baseless" complaint on lehighvalleylive.com and that it was sent to the city's attorneys, even though the city is not included in the suit.

"We'll add it to the pile of other ridiculous lawsuits that have been filed by Abe Atiyeh," the statement said.

"Unless injunctive relief is granted, the unknown ramifications of (the NIZ) could have disastrous consequences on local municipalities, which rely on EIT to perform their necessary governmental functions, as well as on their citizens and businesses who rely on their municipalities to perform their local governmental functions," the suit reads.

The NIZ establishes a 130-acre zone in downtown Allentown that diverts all new state and local nonproperty taxes to fund construction and other development in the region.

City officials are anxious to resolve ongoing litigation to ensure the arena is completed and open by September 2013 so the Phantoms hockey season can begin without delay.

In his 15-page lawsuit, Atiyeh argues because the NIZ was crafted specifically for Allentown, it violates constitutional prohibitions on special laws for a municipal class of one member that is closed off to others.

The NIZ applies to a Pennsylvania city with a population between 106,000 and 107,000 based on 2000 census figures. Allentown is the only city that can meet that criteria, and proponents of the law have freely admitted it was crafted specifically for the city.

Atiyeh also argues the diversion of EIT from local municipalities under the NIZ violates the constitutional requirement that all taxes be uniform.

"Taxation of municipal EIT revenues lacks uniformity ... because it fails to properly identify who is being taxed and at what rate, making it virtually impossible to know how this tax system truly functions," the lawsuit states.

Atiyeh has said he was originally behind efforts to bring a minor-league hockey arena to the Lehigh Valley, but his efforts failed after his partnership with the Brooks Group -- which owns the Phantoms -- fell apart amid disagreements about the location.

He claims his legal challenges to the NIZ do not stem from that falling out, but that he does not believe public tax dollars should fund a nonpublic project that will directly benefit for-profit entities such as the Brooks Group and developer J.B. Reilly.

"I was a partner with (Brooks Group), and we were going to make over a million bucks a year, so I know the tricks," Atiyeh said.

Any new EIT generated by developments within the NIZ zone would continue to be diverted for arena development under the settlement offer, which the municipalities have been discussing in closed-door meetings this week.

In that suit, Atiyeh raised a number of procedural challenges and argued the project both fails to conform to the city's zoning ordinance and adversely affects property he owns.

Atiyeh is also among a number of suburban developers who have been privately meeting to discuss concerns that new office complexes established in the arena area will poach tenants from their own buildings and adversely affect their business interests.

Atiyeh said he believes those discussions could lead to a separate lawsuit against the NIZ, but that no such action is being taken now. Efforts to reach developer Lou Pektor, who Atiyeh said is leading those talks, were unsuccessful.